BlackRock CEO Larry Fink is receiving media play for endorsing net-zero investments in his annual letter to investors, but taking fire from fossil divestment analysts who see little change in what one group calls the company’s “extremely weak coal commitment”.
The annual “Larry’s Letter” is an anticipated event in global investment circles, and the 2020 edition turned heads with its emphasis on climate risk and fossil divestment. But earlier this month, Reclaim Finance and Urgewald accused BlackRock of greenwashing, noting that the company still held US$85 billion in coal investments—and was only applying its divestment commitment to a small proportion of the $7.8 trillion it had under management when the two NGOs completed their report.
In his latest letter, released yesterday, Fink calls for business leaders “to disclose how their businesses will fare in a net-zero carbon economy as the world’s largest fund manager accelerates its push to align investments with the fight against climate change,” the Globe and Mail reports. He warns that the COVID-19 pandemic “has only intensified the reallocation of capital to investments with lower climate risk. The shift in assets has gathered momentum as countries made new pledges to get to net-zero—when greenhouse gas emissions are simultaneously reduced and offset—as they plotted economic recovery,” the paper adds.
BlackRock is threatening to sell its shares in the worst carbon polluters, The Guardian writes.
“Given how central the energy transition will be to every company’s growth prospects, we are asking companies to disclose a plan for how their business model will be compatible with a net-zero economy—that is, one where global warming is limited to well below 2°C, consistent with a global aspiration of net-zero greenhouse gas emissions by 2050,” Fink wrote. “We are asking you to disclose how this plan is incorporated into your long-term strategy and reviewed by your board of directors.”
In a virtual panel Tuesday that also featured Canadian Finance Minister Chrystia Freeland, Fink cast sustainable investing as a “huge” opportunity, the Globe says. “Let’s be clear,” he said. “Let’s focus on society’s acceptance to create new jobs, to create new technologies, to move forward. We’re going to need US$50 trillion of investing to get to a net-zero world.”
The Globe has details on how BlackRock—now with $8.7 trillion under management—plans to roll out its sustainable investment strategy. But the two European NGOs, Reclaim Finance and Urgewald, are declaring themselves less than impressed, noting that there’s “no time left” for BlackRock to dump its coal assets ahead of this year’s United Nations climate conference, COP 26, later this year.
“Larry Fink’s new net-zero commitment could be a positive step if it were paired with concrete and immediate action to stop investing in new fossil fuels,” said Reclaim Finance sustainable investments campaigner Lara Cuvelier. “But a year after its first, extremely weak coal commitment, BlackRock has yet to announce a more ambitious policy. Rather, BlackRock’s $24-billion investments in coal expansion are a perfect illustration of how investors can hide behind ESG credentials and net-zero commitments.”
“It’s a positive sign that BlackRock wants to take its immense responsibility for our climate as the world’s largest asset manager more seriously. What is still lacking, however, are concrete steps,” agreed Urgewald finance campaigner Katrin Ganswindt. “To keep up with decent coal policies by other investors such as AXA, Union Investment, or Allianz, BlackRock needs to do much more: ditch coal expansionists, start excluding coal power players, and lower all thresholds for coal company exclusions close to zero by 2030.”